Climate change and low-income communities

As some of you may realize, climate change policy is in motion at the federal level right now. The American Clean Energy and Security Act (HR 2454, authored by Reps. Waxman and Markey) is currently being amended in the House (expected to hit the floor before the July 4th break, and potentially as soon as Friday, June 26) and hearings on the legislation have already begun in the Senate (expected to begin serious work on the bill closer to fall).

What you may not realize is that the proposed cap-and-trade policy designed to reduce greenhouse gases has important implications for low- and moderate-income households.

Need a refresher on what cap-and-trade is? Cap-and-trade sets a limit on the amount of greenhouse gases that businesses are allowed to emit, which creates a new commodity by auctioning allowances for polluting. Energy companies will probably need to pay for allowances, an expense they will likely pass along to their consumers. That includes low-income families. This price increase will affect not just utility bills (which accounts for less than half of the overall hit to a low-income household’s budget), but also goods and services with significant energy inputs, such as food and gasoline. Low-income consumers spend a larger portion of their budgets on such basic necessities and often do not have the ability to reduce their energy usage by doing things like buying energy-efficient appliances or weatherizing their homes. It is critical that they receive consumer relief.

Although implementing a cap-and-trade system will have a financial impact on lower-income consumers, the alternative is worse. If we do nothing, low-income communities will continue to be hurt by the negative effects of climate change, such as pollution and extreme weather. Low-income communities are particularly vulnerable to these changes.

Thankfully, the current federal legislation has a solution: consumer relief for the lowest 20 percent of the population to hold them fully harmless from increased costs. Although the delivery mechanisms for providing this relief are frequently being tweaked, the bill currently uses an existing mechanism (the Electronic Benefit Transfers, or EBT) to provide efficient delivery of adequate relief to the lowest income households.

Although HR 2454 currently includes protections for low-income households, this legislation has a long way to go before it is finalized. Policymakers are beginning to express that they are not hearing enough from low-income consumers and service-providers. If we want to see these important provisions for low-income households remain intact, or even improve, then those who are concerned about low-income communities need to speak up.

Call your Congressman and ask for their vote in support of HR 2454 and the critical provisions of consumer relief for low-income households. To learn more about our stance on the current legislation or how you can take action, contact me at 651-757-3063 or

-Leah Gardner

About Leah Gardner

Leah Gardner was the Minnesota Budget Project's outreach coordinator.
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One Response to Climate change and low-income communities

  1. Alan Muller says:

    These are very valid concerns, but they don’t get at what is fundamentally wrong with this bill: It creates an artificial commodity with value (allowances) and then gives them away or allows them to be purchased with bogus “offset” schemes. The likely effect is to put hundreds of billions of dollars into the pockets of utilities, investors, and the overprivileged generally. Where will these dollars come from? The pockets of ordinary and poor folk, per usual. (The utilities, etc, will charge for the allowances whether they get them free or now….)
    A fundamentally different sort of bill is needed if we are serious about really addressing climate change and economic justice concerns.


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